The Lost Decade: Key Findings

1
The Lost Decade Key Findings

• Katherine Blauvelt
• Minnesota Budget Projectwww.mncn.org/bp
• March 2009

2
Primary Findings

• State investments from FY 2000 to FY 2009
• E-12 education 10 increase
• Higher education 16 decline
• Child care assistance 26 decline
• Affordable housing and homelessness prevention
  17 decline (since FY 2001)
• All areas have declined since FY 2003

3
How We Got Here
4
In Good Times, More Spent on Tax Cuts Than
Investments

• Of the roughly 13 billion in surpluses on the
  table in the 1997 through 2001 Legislative
  Sessions
• About half went to permanent tax cuts or one-time
  rebates.
• Less than one-third went to improving or
  expanding services.

5
In Bad Times, Spending Cuts, Some Regressive Tax
Increases

• Largest cuts in 2003 Legislative Session 2.5
  billion or 8.1 reduction to FY 2004-05 budget.
• No New Taxes
• Exception 1 Tobacco
• Exception 2 Property Taxes

6
Minnesotans Lose Ground During Economic Recovery

• Poverty is up
• 2001 7.8
• 2007 9.5
• Median household income in Minnesota, adjusted
  for inflation, actually decreased
• 58,400 in 2001
• 55,800 in 2007

7
E-12 Education No Progress Since FY 2003

• Since FY 2003, state funding has declined.
• Greater reliance on property taxes.
• Minnesota went from above average to simply
  average in its education spending compared to
  other states.

8
State Backs Away from E-12 Funding Commitment
9
Property Taxes Up, State Aid Down